EDITORIAL: Never Say Never

If there's a lesson to be learned from this week's lawsuit that the Federal Trade Commission filed against bankrupt Internet toy retailer Toysmart.com for trying to sell its database of consumer information, it's this: Check your privacy policy now. If you say you'll never sell the data you compile on your customers, then don't. Better yet, skip the word “never” entirely, because it's sure to come back and haunt you. If you aren't sure what your company's policy is, ask your newly appointed, thoroughly politically correct chief privacy officer.

Yes, selling the consumer information in one's house files has been standard practice in the offline world for decades. What's different online is that several dot-coms have promised their customers the moon and stars to draw them in to their site. In Toysmart's case, it stated twice in its privacy policy that it won't ever share any information — that includes names, addresses, billing information, shopping preferences and family profiles — with any third parties. Sadly, though, it's naive statements like this one from policy analyst Andrew Shen at the Electronic Privacy Information Center that get the attention: “How many people are going to want to go online to buy a toy for their kids if they know the information can be sold?” Gee, for that matter, how many people are going to want to use a catalog or go to a retail store to buy a toy for their kids if they know the information can be sold?

To stop the media fiasco, The Walt Disney Co., the majority owner of Toysmart, has reportedly offered to purchase the defunct company's customer list and retire it from future use. As the press continues to pound the privacy issue, online and offline marketers can expect even more FTC intervention and legislation from lawmakers — Rep. Spencer Bachus, R-AL, introduced a bill this week that would make it illegal for companies to sell personal information about customers as an asset during the course of a bankruptcy or merger after pledging to safeguard such information.

The best bet: Tell your customers upfront what you're going to do with the information and give them the opportunity to opt out if they don't like it.

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